The three major credit bureaus - Equifax, Experian and TransUnion - collect information about any loans or credit cards in your name. This includes both open (debts you're currently paying off) and closed accounts (loans you've paid off). Long story short: They track whether you kept up with your loan and credit card payment schedules.

Alternative credit bureaus gather information about your monthly bill payment habits. Do you pay your rent, utilities and phone bills on time? These are the types of questions an alternative credit bureau answers.

While the differences between alternative credit bureaus and the three major credit bureaus may seem small, they operate in really different ways. Most of it comes down to how they gather information.

Alternative Credit Bureaus Don't Collect Data Behind Your Back

The three major credit bureaus gather your credit and loan information through business partnerships with credit card companies, banks, credit unions and other businesses that provide lending products. Essentially, once you sign up for a credit card, the Big Three will start creating a credit report associated with you.

Alternative credit bureaus don't do this. Instead, they ask to collect your information when you sign up for alternative credit reports. Some will provide you with an alternative credit report within 15 minutes of signing up for the service. They also give you the option to choose what sort of information you want to provide. For example, through PRBC, you can choose to link your utility, phone, bank and internet accounts to the service.

Long story short: If you don't want an alternative credit report, a bureau won't collect information about you from your utilities, phone company and bank. It's all up to you.

Alternative Credit Bureaus Don't Charge You For Reports

By law, you're allowed to get one free copy of your credit report from Equifax, Experian and TransUnion every 12 months. However, after you get your free report, you'll have to wait another twelve months to get it from the same bureau. If you want to check it again in another three months, you'll have to pay for it.

Alternative credit bureaus allow you to get an alternative credit report for free, anytime, and online. You're not charged a thing whenever you want to check it.

What sort of information does your alternative credit report contain? Check out the differences between regular and alternative credit reports here.